Chia Network, the US-based blockchain startup, has raised $61 million in a funding round which included investment from top venture capital firms Andreessen Horowitz and Richmond Global Ventures.
It has been reported that the decentralized smart contract platform was valued at around $500 million in the funding round. The funding round was also backed by the CEO and co-founder of AngelList Naval Ravikant, Breyer Capital, and True Ventures.
Gene Hoffman, the CFO of Chia Network, said that the firm hopes to go public through an initial public offering (IPO).
“Our goal has always been to go public relatively quickly as that will significantly clarify our regulatory environment and allow customers to use currency to hedge public market volatility, which is different from other coins.”
However, Chia raised more than $3.3 million in a seed round led by Ravikant and Andreessen Horowitz in 2018. The firm describes its Chia token (XCH) as “green money for a digital world.”
The report said that the Chia Network’s principal value proposition is its unique consensus mechanism, “Proof of Space and Time.” The consensus method purports to offer far greater energy efficiency than Proof-of-Work mining, seeking to identify unutilized computing power on validators’ hard drives.
To create or “farm” XCH, users install Chia’s software that writes cryptographic data known as “plots” to their hard drive. The blockchain broadcasts a problem for each new block approximately every 18 seconds, with the likelihood of an individual winning the block determined by the availability of unused computational resources provided by farmers.
Likewise, despite the firm touting XCH as a green alternative to Bitcoin and other cryptocurrencies, some have questioned the network’s eco-friendly claims. In a May 23 article titled Chia Is a New Way to Waste Resources for Cryptocurrency, David Gerard, the author of Attack of the 50 Foot Blockchain, slammed Chia for being “heavy on electricity” and requiring “multiple CPU threads running continuously at close to 100 percent” for farming.
The Chia Network hopes to go public this year after raising $61 in funding, but not everyone is convinced that its XCH token is “green money for a digital world.” https://t.co/GR64GI0UjS — Cointelegraph (@Cointelegraph) May 25, 2021
Gerard emphasized that Chia’s plotting process typically uses a computer’s solid-state drive (SSD) and can burn out an SSD in less than six weeks. By comparison, SSDs subjected to regular usage typically have a lifespan lasting more than a decade.
“Instead of carbon dioxide, Chia produces vast quantities of e-waste—rare metals, assembled into expensive computing components, turned into toxic near-unrecyclable landfill within weeks.”
Gerrard’s prediction that Chia will drive an increase in computing landfills already appears to have weight, with Fortune reporting hard drive shortages throughout the South-East Asia region in anticipation of XCH’s launch.
Thus, an analyst from Bank of America said:
“In recent weeks the demand and pricing for high capacity [hard disk drives] have seen a material step higher […] and enterprise [SSD] prices have also moved higher. [The] sustainability of this trajectory of Chia’s popularity remains unclear.”